Recession, tech's march kill middle-class jobs | The Salt Lake Tribune

ADVANCE FOR RELEASE UNTIL 12:01 a.m. EST,WEDNESDAY, JAN, 23, 2013. THIS PHOTO MAY NOT BE POSTED ONLINE, BROADCAST OR PUBLISHED BEFORE 12:01 a.m. WEDNESDAY, JAN, 23, 2013- FILE - In this Wednesday, June, 15, 2011, file photo, job seekers wait in a line at a job fair in Southfield, Mich. In the United States, half of the 7.5 million jobs lost during the Great Recession were paid middle-class wages, ranging from $37,000 to $68,000. But only 2 percent of the 3.4 million jobs gained since the recession are mid-pay. (AP Photo/Paul Sancya, File)

Labor ? Because of advances, positions lost during Great Recession not likely coming back.

Five years after the start of the Great Recession, the toll is terrifyingly clear. Millions of middle-class jobs have been lost in developed countries the world over.

And the situation is even worse than it appears.

?

From Utah, a dissenting voice

Jobs in the state probably are being lost to technology, ?but that always happens,? and it isn?t a bad thing, said Mark Knold, chief economist at the Utah Department of Workforce Services and an adherent of the process of ?creative destruction,? a concept coined by economist Joseph Schumpeter.

Schumpeter, who died in 1950, believed free markets are constantly renewed and energized by the process of tearing down old economic structures and creating new ones. That natural mutation of the economy is both inevitable and good, Knold said.

?There was a blue ribbon panel commissioned by [former President] Lyndon Johnson in 1964 to address fears that machines and technology were going to replace workers, and we have added millions workers since then,? Knold said.

?What was hard for them to see is that those innovations did replace workers in certain areas, but they also spurred innovation and productivity to the point where it created so many jobs in other areas. [Technology] wasn?t a job destroyer. It was a job creator.?

The number of jobs in the U.S. has almost tripled since the mid-1960s, to more than 143 million. Knold said that increasing the newer jobs have become more sophisticated, ?higher quality? and have commanded better pay. That shift is requiring more of workers in the U.S. and Utah labor forces, which stand at 155.5 million and 1.4 million, respectively.

?In our father?s day, [young people] could come out of high school and get a good-paying, sweat-of-the-brow job at Kennecott or Geneva Steel,? Knold said. No longer, he added, because ?good jobs now need education, [and] I would say that the shift toward more education in the job market is accelerating, not decelerating.?

Knold said Utah took part in a worldwide technological revolution in the years leading up to the start of the Great Recession in 2007. Rather than throw people out of work, the economy before the downturn generated thousands of jobs and drove the unemployment rate under 2.5 percent for awhile.

?And then we had a bad recession. But this recession was not the result of technology or any bad spinoff of technology advancements. This recession is the result of bad government policies and mismanagement of the financial sector,? he said.

Knold doesn?t see much evidence that Utah employers are replacing better-paying jobs with lower-paying ones. On one hand, there are fewer retail, construction and manufacturing jobs today than before the recession started. On the other, sectors such as professional and business services, health care, education and government ? all of which ostensibly pay workers well ? are more numerous.

Paul Beebe

Most of the jobs will never return, and millions more are likely to vanish, say experts who study the labor market. What?s more, these jobs aren?t just being lost to China and other developing countries, and they aren?t just factory work. Increasingly, jobs are disappearing in the service sector, home to two-thirds of all workers.

They?re being obliterated by technology.

Year after year, the software that runs computers and an array of other machines and devices becomes more sophisticated and powerful and capable of doing more efficiently tasks that humans have always done. For decades, science fiction warned of a future when we would be architects of our own obsolescence, replaced by our machines; an Associated Press analysis finds that the future has arrived.

Not many get a pass ? "The jobs that are going away aren?t coming back," said Andrew McAfee, principal research scientist at the Center for Digital Business at the Massachusetts Institute of Technology and co-author of Race Against the Machine. ??I have never seen a period where computers demonstrated as many skills and abilities as they have over the past seven years."

The global economy is being reshaped by machines that generate and analyze vast amounts of data; by devices such as smartphones and tablet computers that let people work just about anywhere, even when they?re on the move; by smarter, nimbler robots; and by services that let businesses rent computing power when they need it, instead of installing expensive equipment and hiring IT staffs to run it. Whole employment categories, from secretaries to travel agents, are starting to disappear.

"There?s no sector of the economy that?s going to get a pass," said Martin Ford, who runs a software company and wrote The Lights in the Tunnel, a book predicting widespread job losses. "It?s everywhere."

The numbers startle even labor economists. In the United States, half the 7.5 million jobs lost during the Great Recession were in industries that pay middle-class wages, ranging from $38,000 to $68,000. But only 2 percent of the 3.5 million jobs gained since the recession ended in June 2009 are in midpay industries. Nearly 70 percent are in low-pay industries, 29 percent in industries that pay well.

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In the 17 European countries that use the euro as their currency, the numbers are even worse. Almost 4.3 million low-pay jobs have been gained since mid-2009, but the loss of midpay jobs has never stopped. A total of 7.6 million disappeared from January 2008 through last June.

Experts warn that this "hollowing out" of the middle-class workforce is far from over. They predict the loss of millions more jobs as technology becomes even more sophisticated and reaches deeper into our lives. Maarten Goos, an economist at the University of Leuven in Belgium, says Europe could double its middle-class job losses.

Some occupations are beneficiaries of the march of technology, such as software engineers and app designers for smartphones and tablet computers. Overall, though, technology is eliminating far more jobs than it is creating.

Technology?s march ? To understand the impact technology is having on middle-class jobs in developed countries, the AP analyzed employment data from 20 countries; tracked changes in hiring by industry, pay and task; compared job losses and gains during recessions and expansions over the past four decades; and interviewed economists, technology experts, robot manufacturers, software developers, entrepreneurs and people in the labor force who ranged from CEOs to the unemployed.

The AP?s key findings:

? For more than three decades, technology has reduced the number of jobs in manufacturing. Robots and other machines controlled by computer programs work faster and make fewer mistakes than humans. Now, that same efficiency is being unleashed in the service economy, which employs more than two-thirds of the workforce in developed countries. Technology is eliminating jobs in office buildings, retail establishments and other businesses consumers deal with every day.

? Technology is being adopted by every kind of organization that employs people. It?s replacing workers in large corporations and small businesses, established companies and startups. It?s being used by schools, colleges and universities; hospitals and other medical facilities; nonprofit organizations and the military.

? The most vulnerable workers are doing repetitive tasks that programmers can write software for ? an accountant checking a list of numbers, an office manager filing forms, a paralegal reviewing documents for key words to help in a case. As software becomes even more sophisticated, victims are expected to include those who juggle tasks, such as supervisors and managers ? workers who thought they were protected by a college degree.

? Thanks to technology, companies in the Standard & Poor?s 500 stock index reported one-third more profit the past year than they earned the year before the Great Recession. They?ve also expanded their businesses, but total employment, at 21.1 million, has declined by a half-million.

? Startups account for much of the job growth in developed economies, but software is allowing entrepreneurs to launch businesses with a third fewer employees than in the 1990s. There is less need for administrative support and back-office jobs that handle accounting, payroll and benefits.

A jobless recovery ? Some analysts reject the idea that technology has been a big job killer. They note that the collapse of the housing market in the U.S., Ireland, Spain and other countries and the ensuing global recession wiped out millions of middle-class construction and factory jobs. In their view, governments could bring many of the jobs back if they would put aside worries about their heavy debts and spend more. Others note that jobs continue to be lost to China, India and other countries in the developing world.

But to the extent technology has played a role, it raises the specter of high unemployment even after economic growth accelerates. Some economists say millions of middle-class workers must be retrained to do other jobs if they hope to get work again. Others are more hopeful. They note that technological change over the centuries eventually has created more jobs than it destroyed, although the wait can be long and painful.

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